Why do people specialize and trade?
What will be an ideal response?
People can compare consumption possibilities from producing all goods and services through self-sufficiency against specializing in producing only those goods and services that reflect their comparative advantage and trading their output with others who do the same. People can then see that the consumption possibilities from specialization and trade are greater than under self-sufficiency. Therefore it is in people's own self-interest to specialize. It was Adam Smith who first pointed out in the Wealth of Nations how individuals voluntarily engage in this socially beneficial and cooperative activity through the pursuit of their own self-interest, rather than for society's best interests.
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The figure above shows an education market in which the government is providing households with vouchers. What is the efficient quantity of students?
A) 2 million B) 4 million C) 6 million D) more than 6 million E) more than 4 million and less than 6 million
Short run economic costs must be lower than long run economic costs because long run economic costs include the cost of inputs that are fixed in the short run (and thus are not part of short run cost).
Answer the following statement true (T) or false (F)